Commodities: Mixed picture in oil markets, gold flat but base metals on sound footing

Oil markets have started the trading week on a mixed note in Asia with the WTI marginally down, and Brent broadly in flat territory on Monday.

At 07:30 BST, the WTI front month futures contract was trading at $59.35 per barrel down 0.07% or 4 cents while Brent was up 8 cents or 0.10% at $65.47. Both benchmarks capped their highest levels for the current trading year on 6 May before retreating on Thursday as oversupply concerns returned to weigh on the market.

On the precious metals front, gold began Asian trading in the red following a reversal in fortunes on Friday. After successive sessions of losses, the precious metal recovered ground as the close of the last trading week approached, but slipped marginally in to the red again on Monday.

Traders in Singapore told Sharecast US payrolls data supported speculation last week that the Federal Reserve may hold off raising interest rates in June thereby boosting gold prices, but the sentiment was not holding up in intra-day trading.

COMEX gold was trading down $1.30 or 0.11% at $1,187.60 an ounce while spot gold was fetching $1,187.30 an ounce down $1.09 or 0.09%. Additionally, COMEX silver was trading at $16.44 an ounce down 3 cents or 0.15%.

Meanwhile, base metals enjoyed their best trading week of the year last week with copper, nickel and zinc all closing at record highs on 7 May, banking on the potential for rising Chinese demand, before seeing slightly tempered trading by the close of markets on Friday.

The LME three-month copper contract closed down $28 or 0.4% at $6,380 per tonne, nickel closed up $100 or 0.7% at $14,237.50 per tonne while zinc closed down $18 or 0.0% at $2,347 per tonne.

Commenting on market sentiment, Kevin Norrish, commodities analyst at Barclays, said: “One of the most important financial market trends of the second quarter so far has been the strong performance of energy and industrial commodities.

“However, prices appear to have moved ahead of the improvement in underlying fundamentals, and with fewer market makers to absorb the shocks, potentially a period of high volatility could lie ahead.”

On the agricultural commodities front, CBOT corn and wheat futures contracts for July delivery were in the red, while ICE cocoa, cotton and CME cattle contracts were all in the green.